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Revenue (Net Sales)

Revenue (sales, net sales or net revenue) is the income a company earns from its core activity over a period and the top line of the income statement. Net revenue is the income left from product and service sales after returns, discounts and other sales deductions; Turkish financial statements report it on the “Hasılat” (revenue) line.
Contents
  1. 1.Key points
  2. 2.Formula / calculation
  3. 3.Interpretation
  4. 4.Pitfalls
  5. 5.Frequently asked questions

Key Points

  • It is the most basic measure of a company’s size and growth rate and the denominator of every margin calculation.
  • Sales growth above inflation means real volume growth or pricing power.
  • nominal sales growth is misleading under high inflation; look at real growth.

Formula / Calculation

Net revenue = Gross sales − Sales returns − Sales discounts − Other sales deductions. Annualised revenue is the sum of the last four quarters. Revenue growth = (This period − Same period last year) / Same period last year × 100.

Interpretation

Sales growth above inflation means real volume growth or pricing power. Gross margin, EBITDA margin and net margin are all computed relative to sales; falling margins on rising sales indicate cost pressure.

Pitfalls

nominal sales growth is misleading under high inflation; look at real growth. Consolidated sales include subsidiaries. Revenue recognition timing (long-term contracts) creates quarterly swings.

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Frequently Asked Questions

Revenue (sales, net sales or net revenue) is the income a company earns from its core activity over a period and the top line of the income statement.

Net revenue = Gross sales − Sales returns − Sales discounts − Other sales deductions. Annualised revenue is the sum of the last four quarters. Revenue growth = (This period − Same period last year) / Same period last year × 100.

Prepared by: Yatırımcı.AI Research TeamLast reviewed: Method: MethodologyEditorial policy